Our mandate

We stabilise Swedish pensions

The Fund’s mandate is to manage money in the pension system in the best possible way, so as to increase financial stability in the long term.

Första AP-fonden (AP1) plays a key role for Swedish pensioners. Good performance by the Fund helps to create stability across generations.

We manage assets for Sweden’s pensioners, and have many different asset types worth SEK 338 billion in total.

Our mandate is to create the best possible return on these assets. Our target is a return of at least 4 per cent in real terms (i.e. adjusted for inflation) over 10 years. Our performance in recent years has far exceeded this target.

AP1 plays a key role as a reserve for Swedish pensioners

The Fund’s capital serves as a reserve in years when disbursements of income pension exceed contributions. This means that pensions do not need to be affected by differences between different years.

The money is not running out

The Swedish pension system is robust. It is technically impossible for it to go into debt over time, since it has a built-in balancing mechanism, or ‘brake’, to ensure that assets do not fall below liabilities.

Brake brings balance

The income pension system is primarily unfunded, which means that incoming pension contributions are used to fund the same year’s pension disbursements. The reserve assets managed by AP1, along with AP2-4, exist to deal with the difference between ongoing pension contributions and pension disbursements.

The pension system contains a balancing mechanism or ‘brake’ to ensure that the system cannot pay out more than it can afford. This brake means that pensions are adjusted upwards more slowly at times when liabilities exceed assets. An increase in AP1’s assets can, therefore, help to ensure that automatic balancing can be avoided.

Due to the high rate of retirement, over the past few years the Funds have made net disbursements to the pensioners, and this is expected to continue for many years to come.

Disbursements are determined by contributions

The amount of money paid out to each individual depends on the size of contribution each person has paid into the system, and this in turn is dependent on salary and term of employment. If the Swedish economy develops well and the AP Funds’ return is sufficiently high, this reduces the likelihood of the brake having an adverse impact on pensions.